THE REMITTANCES OF FOREIGN EXCHANGE AND INVESTMENT IN FOREIGN 
EXCHANGE BONDS (IMMUNITIES AND EXEMPTIONS) ACT, 1991 
_________ 

ARRANGEMENT OF SECTIONS 
________ 

CHAPTER I 

PRELIMINARY 

SECTIONS 

1.  Short title and extent. 

CHAPTER II 

REMITTANCES OF FOREIGN EXCHANGE 

2.  Definitions. 
3.  Immunities. 
4.  Remittances not to be taken into account in certain cases. 

CHAPTER III 

INVESTMENT IN FOREIGN EXCHANGE BONDS 

5.  Definitions. 
6.  Immunities. 
7.  Foreign Exchange Bonds not to be taken into account in certain cases. 

1 

 
 
 
 
THE REMITTANCES OF FOREIGN EXCHANGE AND INVESTMENT IN FOREIGN 
EXCHANGE BONDS (IMMUNITIES AND EXEMPTIONS) ACT, 1991 

 ACT NO. 41 OF 1991 

[18th September, 1991.] 

An Act  to  provide for certain  immunities to  persons  receiving remittances in  foregin exchange 
and to persons owning the Foreign Exchange Bonds and for certain exemptions from direct 
taxes  in  relation  to  such  remittances  and  bonds  and  for  matters  connected  therewith  or 
incidental thereto. 

WHEREAS  the  position  relating  to  balance  of  payments  has  become  difficult  and  it  is  necessary  to 

attract large inflow of foreign exchange; 

AND WHEREAS with a view to attracting such inflow of foreign exchange, it is expedient to provide for 
certain immunities and exemptions to render it possible for certain persons to receive the said remittances 
in foreign exchange and to own the said Bonds; 

BE it enacted by Parliament in the Forty-second Year of the Republic of India as follows:— 

CHAPTER I 

PRELIMINARY 

1.  Short  title  and  extent.—(1)  This  Act  may  be  called  the  Remittances  of  Foreign  Exchange  and 

Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991. 

(2) It extends to the whole of India. 

CHAPTER II 

REMITTANCES OF FOREIGN EXCHANGE 

2. Definitions.—In this Chapter, unless the context otherwise requires,— 

(a) “recipient” means a person as defined in clause (31) of section 2 of the Income-tax Act, 1961 

(43 of 1961) who receives any remittance under this Chapter; 

(b) “remittance” means remittance made in foreign exchange by any person resident outside India 
to a person resident in India on or after the date of commencement of this Act but before the specified 
date,  in  the  form  of  draft,  traveller’s  cheques,  cheques  drawn  on  banks  situated  outside  India 
telegraphic transfers, mail transfers, money orders or by way of transfer from Non-resident (External) 
Account, Foreign Currency Non-resident Account or Foreign Currency Non-resident Special Deposit 
Account maintained in India under the rules made under the Foreign Exchange Regulation Act, 1973 
(46 of 1973). 

Explanation.—For the purposes of this clause, “specified date” means the 1st day of December, 
1991 or such other later date as the Central Government may, by notification in the Official Gazette, 
specify in this behalf; 

(c)  all  other  words  and  expressions  used  in  this  Chapter  but  not  defined  and  defined  in  the 
Foreign Exchange Regulation Act, 1973 (46 of 1973) shall have the meanings respectively assigned 
to them in that Act. 

 3.  Immunities.—(1)  Notwithstanding  anything  contained  in  any  other  law  for  the  time  being  in 

force,— 

(a) no recipient, who claims immunity under this Chapter in accordance with such scheme as the 
Reserve  Bank  of  India  may,  by  notification  in  the  Official  Gazette,  specify  for  the  purposes  of 
receiving remittances under this Chapter, shall be required to disclose, for any purpose whatsoever, 
the nature and source of the remittance made to him; 

(b) no inquiry or investigation shall be commenced against the recipient under any such law on 

the ground that he has received such remittance; 

2 

 
(c) the fact that the recipient has received a remittance shall not be taken into account and shall be 
inadmissible as evidence in any proceedings relating to any offence or the imposition of any penalty 
under any such law. 

(2) Nothing in sub-section (1) shall apply— 

(a) to any foreign exchange which is required to be brought into India under any of the provisions 

of— 

(i) the Foreign Exchange Regulation Act, 1973 (46 of 1973); or 

(ii) the Income-tax Act, 1961 (43 of 1961), read with the Foreign Exchange Regulation Act, 

1973 (46 of 1973), 

if the period within which such foreign exchange is to be brought into India has not expired or where such 
period has been extended, in any manner, by the Central Government or the Reserve Bank of India or any 
other authority, such extended period has not expired on the date of commencement of this Act; 

(b) in relation to prosecution for any offence punishable under Chapter IX or Chapter XVII of the 

Indian  Penal  Code  (45  of  1860),  the  Narcotic  Drugs  and  Psychotropic  Substances  Act,  1985                 
(61  of  1985),  the  Terrorist  and  Disruptive  Activities  (Prevention)  Act,  1987  (28  of  1987),  the 
Prevention  of  Corruption  Act,  1988  (49  of  1988)or  for  the  purpose  of  enforcement  of  any  civil 
liability. 

(3) The Central Government shall cause the scheme notified under clause (a) of sub-section (1) to be 

laid, as soon as may be after it is notified, before each House of Parliament. 

4. Remittances not to be taken into account in certain cases.—Without prejudice to the generality 

of the provisions of section 3,— 

(a) any remittance received under this Chapter shall not be taken into account for the purpose of 
any proceeding under the Income-tax Act, 1961 (43 of 1961) and, in particular, the recipient shall not 
be entitled to claim any set-off or relief in any assessment, re-assessment, appeal, reference or other 
proceeding under that Act or to re-open any assessment or re-assessment made under that Act on the 
ground that he has received such remittance. 

Explanation.—For  the  avoidance  of  doubt,  it  is  hereby  declared  that  the  provisions  of  the  
Income-tax Act, 1961 (43 of 1961) will apply to any income which accrues or arises or is deemed to 
accrue or arise to the recipient from the amount of the remittance; 

(b) any remittance received under this Chapter shall not form part of the assets of any assessee for 
the purposes of computing his net wealth under the Wealth-tax Act, 1957 (27 of 1957) in relation to 
any assessment year commencing before the 1st day of April, 1992. 

CHAPTER III 

INVESTMENT IN FOREIGN EXCHANGE BONDS 

5. Definitions.—(1) In this Chapter, unless the context otherwise requires,— 

(a) “Foreign Exchange Bonds” means the Bonds, issued by the State Bank of India constituted 
under the State Bank of India Act, 1955 (28 of 1955) in accordance with such scheme as the Reserve 
Bank  of  India  may,  by  notification  in  the  Official  Gazette,  specify  in  this  behalf,  the  investment 
wherein is made on or after the date of commencement of this Act but before the specified date. 

Explanation.—For the purposes of this clause, “specified date” means the 1st day of December, 
1991 or such other later date as the Central Government may, by notification in the Official Gazette, 
specify in this behalf; 

(b)  “non-resident  Indian”  means  an  individual,  being  a  citizen  of  India  or  a  person  of  Indian 

origin who is resident outside India. 

Explanation 1.—A person shall be deemed to be of Indian origin if— 

3 

 
(i) he, or either of his parents or any of his grand- parents, was a citizen of India by virtue of 

the Constitution or the Citizenship Act, 1955 (57 of 1955); or 

(ii) he at any time held an Indian passport: 

Provided that the nationals of Pakistan or Bangladesh shall not be deemed to be of Indian origin. 

Explanation 2.—A spouse (not being a national of Pakistan or Bangladesh) of a person of Indian 

origin shall also be deemed to be of Indian origin; 

(c) “overseas corporate body” means any institution, association or body, whether incorporated or 
not, established under the laws of a  country  outside India  wherein  any  non-resident  Indian  has  any 
interest; 

(d)  all  other  words  and  expressions  used  in  this  Chapter  but  not  defined  and  defined  in  the 
Foreign Exchange Regulation Act, 1973 (46 of 1973), shall have the meanings respectively assigned 
to them in that Act. 

(2) The Central Government shall cause the scheme notified under clause (a) of sub-section (1) to be 

laid, as soon as may be after it is notified, before each House of Parliament. 

6. Immunities.—(1) Notwithstanding anything contained in the Wealth-tax Act, 1957 (27 of 1957), 
the  Gift-tax  Act,  1958  (18  of  1958),  the  Income-tax  Act,  1961  (43  of  1961),  the  Foreign  Exchange 
Regulation Act, 1973 (46 of 1973) and the Foreign Contribution (Regulation) Act, 1976 (46 of 1976),— 

(a) no non-resident Indian or overseas corporate body who or which owns the Foreign Exchange 
Bonds  or  any  person  resident  in  India  to  whom  a  gift  of  such  Bonds  has  been  made  by  such  non-
resident Indian or overseas corporate body, shall be required to disclose, for any purpose whatsoever, 
the nature and source of the investment in such Bonds; 

(b)  no  inquiry  or  investigation  shall  be  commenced  against  any  of  the  persons  referred  to  in 

clause (a) under any of the said Acts on the ground that such person owns such Bonds; 

(c) the fact that any of the persons referred to in clause (a) owns such Bonds shall not be taken 
into account and shall be inadmissible as evidence in any proceedings relating to any offence or the 
imposition of any penalty under any of the said Acts.  

(2) Nothing in sub-section (1) shall apply to foreign exchange which is required to be brought into 

India under any of the provisions of— 

(i) the Foreign Exchange Regulation Act, 1973 (46 of 1973);or 

(ii) the Income-tax Act, 1961 (43 of 1961), read with the Foreign Exchange Regulation Act, 

1973 (46 of 1973), 

if the period within which such foreign exchange is to be brought into India has not expired or where such 
period has been extended, in any manner, by the Central Government or the Reserve Bank of India or any 
other authority, such extended period has not expired on the date of commencement of this Act. 

7. Foreign Exchange Bonds not to be taken into account in certain cases.—Without prejudice to 

the generality of the provisions of section 6,— 

(a)  the  provisions  of  the  Income-tax  Act,  1961  (43  of  1961)  shall  not  apply  to  any  interest 

accruing in relation to the Foreign Exchange Bonds; 

(b)  the  provisions  of  the  Wealth-tax  Act,  1957  (27  of  1957)  shall  not  apply  in  relation  to  the 

Foreign Exchange Bonds; 

(c) the provisions of the Gift-tax Act, 1958 (18 of 1958) shall not apply where any non-resident 

Indian becomes a resident in India and makes a gift of the Foreign Exchange Bonds.  

4 

 
